Case 3:13cr-03046-CAB Document 1 Filed 08/15/13 … . I ' Case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 2 of 15 1 3. In or about August and September 2004, defendant BAILEY

.·.1

Case 3:13"cr-03046-CAB Document 1 Filed 08/15/13 Page 1 of 15

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3

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ZOIHUG 15 r'M 12: 02

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. ; I I Cl ' CASE UNSEAlED PER ORDER OF COURT · .

. ,,.;QS_. ___ ,.

UNITED STATES DISTRICT. COURT '; ' .

SOUTHERN DISTRICT OF CAt!FORN!A

.... : . ·.'

10. December 2012 Grand JUry'13 CR304 6CAB

11 UNITED STATES OF AMERICA,

12 Plaintiff 1

13 v.

14 WILLIAM RICHARD BAILEY,

15 Defendant.

) Case No· .. ) ) ) ) ) ) ) ) )

1.!3.Rl.fTM!O'IT Title 26'1 U.S.C. 1 Sec. 7201 - Tax Elvasion

16 ----~--------------> 17 The Grand Jury charges:

l8 ~NTROpUCTORX ALLEGA~~QNS.

19 At all times relevant herein:

20 1. The federal income tax system of the United States of

21 America relies upon citizens to truthfully, accurately, and timely'

22 report income and expense information to the l;nternal Revenue Service.

23 2 . Beginning in or about 1989, and continuing through at least

24 the date of this Indictment, defendant WILLIAM RICHARD BAILEY

25 (hereinafter "defendant BAILEY.") was a physician who practiced

26 osteopathic me,dicine and provided medical services to patients of

27 various clinics.

2a II

JJO:nlv:San Diego .8/1!5/_:),3

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Case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 2 of 15

1 3. In or about August and September 2004, defendant BAILEY

2 executed documents that were.purportedly part of the creation of a

3 "trust" and "unincorporated business trust organization" (hereinafter

4 "UBO") and was used by defendant BAILEY during at least calendar years

s 2004 through 2011 for the purpose of concealing from the Internal

6 Revenue Service income from defendant BAlLEY's practice as a

7 physician.

8 4. For at least calendar years 2004 through 2011, defendant

9 BAILEY provided physician services :l.n exchange for compensation under

10 service contracts as an "employee" of the "l.1BO" with the entities of

11 at .least two physicians who operated cl:lnics ±n San Diego county. The

12 contracts directed the entities of the physicians to make payments for

13 services provided by defendant BAILEY to the "UBO."

14 5. In or about September 2004, defendant BAILEY opened and

15 caused to be opened a bank account in the name of the "l.ll30," whereby

16 defendant BAILEl had signature autho:dty on the bank account.

17 6. on or about April 15, 2005, defendant BAILEY failed to file

l.8 a u.s. inqividua1 income ta:x: return for tax year 2004.

19 7. On or about April 15, 2006, defendant BAILEY failed to file

20 a u.s. individual income tax return for tax year 2005.

21 8. on or about April 15, 200T, defendant BAILEY failed to file

22 a U.S, individual income tax return for tax year 2006.

23 9 . on or about October 31, 2007, defendant BAILEY appeared

24 before the u.s .. Tax Court in the Southern District of California, and

25 the Court made a finding that BAXLEY had taxable income that must be

26 reported to the Internal Revenue Service.

27 I I

28 //

2

1

2

3


ColiD.t..J,.

'l'AX EVJ\,SION

[26 u.s.c. § 7201]

4 10. The allegations set.forth in paragraphs 1 through 6, and 9

5 above are realleged as if fully set forth herein.

6 11. Beginning on or about January l, 2004, and continuing up to

'7 and including at least on or about September 10, 2008, within the

6 Southern Dist:dct of California, defendant WILLIAM RICHARD BAILEY

9 (hereinafter "defendant BA;r.LEY") , well-knowing and believing that lJ,e

10 had taxable income and a tax due and owing for the calendar year 2004,

11 did willfully attempt to evade and defeat this tax due and owing by

12 him to the United States by committing the following affirmative acts

13 of evasion, among others, the likely effect of each of which would be

14 to mislead and conceal his true and correct income and tax due thereon

15 from proper officers of the United states:

16 a. ouring the ca.lenda:r. year 2004, defendant BAILEY

17 received checks from. at least two physicians who operated clinics in

18 san Diego County where defendant BAILEY provided physician services

19 in exchange for compensat:Lon.. Defendant BAiLEY di.rected that the

20 checks be made payable to the name of the "UBO."

21 b. ouri.ng the calendar year 2004, defendant BAILEY

22 deposited income from his pra.ctice as a physic:lan into a bank account

23 in the name of the "UBO" created for the purpose of tax evasion.

24 . c' During the calendar · year 2 0 04, defendant BAILEY

25 transferred and caused to be transferred funds from the bank account

26 in the name of the "UBO" to pay for defendant BAILEY's personal

27

28

expenses and benefit.

II

3

Case 3:13-cr-03046-CAB Document 1 Filed 08/:LS/13 Page 4 of 15

1 d. On or about September 10, 2 oo 8, defendant BAILEY

2 prepared and caused to be prepared and signed a false and fraudulent

3 u.s. Individual Income Tax Return, Form 1040EZ, for the calendar year

4 2004 1 on behalf of himself, which was filed with the Internal Revenue

5 Service, and which contained and was verified by a written declaration

6 that it was made under the penalties of perjury and that defendant

7 BAILEY acc·urately listed all amounts and sources of income that he

8 received during the calendar year 2004, and wherein it was stated that

9 his taxable income for the calendar year 2004 was the sum $0 and that

10 the amount of the tax due and owing therein was the sum ·of $0,

11 whereas, as he then and there well knew and believed, his taxable

12 income for the calendar year 2004 was in excess of that heretofore

13 stated amount and that. upon said additional taxable income an

14 additional tax was due and owing to the United States.

15 All in violation of Title 26, United States Code, Section 7201.

16

17

18

Count 2

TAX EVASION

[26U.S.C. § 7201}

19 12. The allegations set forth in paragraphs 1 through 5 1 7 a.nd 9


21 13. Beginning on or about January 1, 2005, and continuing up to

22 and including at least on or about September 10, 2008, within the

23 Southern District of California, defendant WILLIAM RICHARD BAILEY

24 (hereinafter "defendant BAILEY"), well-knowing and believing that:. he

25 had taxable income and a tax due and owing for the calendar year 2005,

26 did willfully attempt to evade and defeat this tax due and owing by

27 him to the United States by committ:Lng the following affirmative acts

28 of evasion, among ot;hers, the likely effect of each of which would be

4

, Case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 5 of 15

1 to mislead and conceal his true and correct income and tax due thereon

2 from proper officers of the United States:

3 a. During the calendar year 2005, defendant BAII,EY

4 received checks from at least two physicians who operated clinics in

5 san Diego County where defendant BAILEY provided physician services

6 in exchange for compensation. Defendant BAILEY directed that the


a b. During the calendar year 2005, defendant BAILEY

9 deposited income from his practice as a physician into a bank account

10 in the name of the "UBO" created for the purpose o:E tax evasion.

11 c. During the calendar year 2005, defendant BAILEY



14 expenses and benefit.

15 d. On or about September 10, 20 08, defendant 131\.I:LE:Y


17 u.s. Individual Income Tax Return, Form 1040E:z; for the calendar year

J.B 2005, on behalf of himself, w~ich was filed with the Internal Revenl.\e



21 BAILEY accurately listed all amounts and sources of income that he


23 his taxable income fo;~;"·the calendar year 2005 was the sum $0 and that

24 the amount of the tax due and owing therein was the sum of $0,

25 whereas, as he then and there well knew and believed, his taxable

26 I I

27 II

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Case 3:13-cr-03046--CAB Document 1 Filed 08/15/13 Page 6 of 15


2 stated amount and that upon said additional taxable income an

3 additional ta:x: was due and owing to the United States,


s 6

7

Count 3

TAX l!lYASIQN

[26 u.s.c. § 7201]

8 14. The allegations set forth. in paragraphs 1 through 5, s and 9



11 and including at least on or about september 10, 2008, within the

. 12 Southern District of California, defendant WIJ"LIAM RICHARD BAILEY

13 (hereinafter "defendant BAJ:LEY"), well-knowing and believing that he

H had taxable income and a tax due and owing fpr the calendar year 2006,

:L5 did willfully attempt to evade and defeat_this tax due and owing by

16 him to the United States by committing the following affirmative acts

17 of evasion, among others, the likely effect of each of which would be

16 to mislead and conceal his true and cox;r:ect income and tax due thereon

19 from proper officers of the united States·:

20 a. During the calendar year 2006, defendant BAXLEY


22 San Diego County where defendant BAILEY provided physician services



25 b. During the calendar year 2006, defendant BAILEY



26 //

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2 transferl:'ed and caused to be.transferred funds from the bank account

3 in the na.me of the "UBO" to pay for defendant BAILEY's personal


5 d. On or about September 10, 2008, defendant BAILEY


7 u.s. lndividual Income Tax Return, Form 1040EZ, for the calendar year

8 2006, on behalf of himself, which was filed with the Internal Revenue

9 .service, and which contained and was ver.ified by a. written declaration



12 received during the calendar year 2006, and wherein it was stated tbat



15 whereas, as be then and t:.J::tere well knew and believed, :his taxable

16 income for the calendar year 2006 was in excess of !that heretofore


18 additional tax was due and owing to the united States.

19 All in violation o:r: Title 26, United states Code, section 7201.

20

21

22

Count 4

~

[26 u.s.c. § 7201]

23 16. The allegations set forth in pa.ragraphs 1 through 5 I and 9

24 above are realleged as if fully set forth he:t·ein.


26 and including at least on or about September 18, 2008, within the

27 Southern District of California, defendant WILT"IAM RICHARD BAII,EY

28 (hereinaf.ter "defendant BAILEY"), who during calenda.r. year 2007 was

7

'··


1 married, well-knowing and believing that he and his spouse had taxable

2 income and a tax due and owing for the calendar year 2007, did

3 willfully attempt to evade and defeat this tax due and owing by him

4 and his spouse to the United States by committing the following

5 affirmative acts of evasion, among others, the liltely effect of each

6 of whi.ch would be to mislead and conceal their true and correct income

7 and tax due thereon from proper officers of the United States:

8 a. During the calendar year 2007, defendant BAIJ:,EJY

9 received checks from at least two_physicians who operated clinics in

10 San Diego county where defendant BAILEY provided physician services

11 in exchange for compensation. Defendant BAILEY directed, that the

12 checl~s be made payable t..o the name of the "UBO."



·15 in the name of the "UBO" created for the purpose of tax evasion.

16 c. During the calendar year 200'7, defendant BAILEY


lB in the name of tlle "UBO" to pay for defendant BAILEY's personal,

19 expens~s and benefit.

:20 d. On or about September -18, 2008, defendant BAII.lW

21 p:t·epared and caused to be prepared and signed a false and fraudulent

22 U.S. Individual Income Tax Return, Form 1040EZ, for the calendar year

23 2007, on behalf of himself, which was filed with the Internal Revenue


25 that .it was made under the penalties of perjury and that defendant


27 roeceived during the calendar yea:r 2007, and wherein it was stated that


.8.

'. Case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 9 of 15


2 whereas, as he then and there welJ. knew and believed, his taxable



5 additional tax was due and owing to the Onited States.


7

·8

9

Count 5

71AX lilYASION

[26 tT.S.C. § 7201]

10 18. 'rhe allelgations set forth in paragraphs 1 through 5, and 9



13 and including at least on or about April 15, 2009 1 within the Southern

14 District of California, defendant WILLIAM RICHARD BAILEY (hereinafter

15 "defendant BAII.EY"), who during calendar year 2008 was married, welJ.-

16 knowing and believing that he and his spouse had taxable income and

17 a tax due and owing tor the calendar year 2008, did willfully attempt

18 to evade and defeat this tax due and owing by him and his spouse to

19 the United States by committing the following affirmative acts of

20 evasion, among others, the likely effect of each of which would be to

21 misl.eadand conceal their true and correct income and tax due thereon

22 from proper officers of the !Jhited States:

23 a. During the calendar year 2008, defendant BAILEY





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case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 10 of 15

1 b. During the calendar year 2 0 08, defendant BAILEY

2 deposited income .from his practice as a physician into a bank account

3 in the name of the "UBO" created f.or the purpose of tax evasion.

4 c. During the calendar year 2008, defendant BAJ:LEY




a d. On or about April 15, 2009, defendant BAJ:LEY prepared

9 and caused to be prepared and signed a h.l.se and fraudulent u.s. 10 Individual Income Tax Return, Form 1040A, for the calendar year'2008,

11 on behalf of himself, which was filed with the Internal Revenue

12 Service, and which contained· and was verified by a written decl.'aration

13· that it was made under the penalties of perjury and that defendant

14 BA!LEY accurately listed all amounts and sources of income that he




18 whereas, as he then and tllere well knew and believed, his taxable


20 stated amount; and that upon said additional taxable income an

21 additional tax was due and. owing to the United States.


23

24

25

Count 6

:rAJ EVASION

[26 u.s.c. § 7201]

26 20. 'l'he allegations set forth in para.graphs 1 t.h:~;·ough 5, and 9


28 //

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case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page H of 15

l 21. Beginning on or about January 1, 2009, and continuing up to

2 and including at least on or about April 15, 2010, within the Southern

3 District of California, defendant WILLIAM RICHARD BAILEY (hereinafter

4 "defendant BAILEY"), who dur:!.ng calendar year 2009 was married, well

s knowing and believing that he and his spouse had taxable income and

6 a tax due and owing for the calendar year 2009, did willfully attempt

7 to evade and defeat this tax due and owing by him and his spouse to

s the United States by committing the following affirmative acts of

9 evasion, among others, the likely effect of each of which would be to

10 mislead and conceal their true and correct income and tax due thereon

11 from proper officers of the united states:


13 received checks f:t'om at least one physician who operated a clinic in



:t.6 checks be made payable to the name of the "UBO. "

17 b. During the calendar yea:t' 2009, defendant BAILEY

~a deposited income from his practice as a physician into a bank account


20 c. During the calendal:' ye1l.:r 2009, defendant BAILEY

21 transferred and caused to be transfe:t'red funds from the banl~ account

22 in the name of the "UBO" to pay for defendant BAU.EY' s personal


24 d. On or about April 15, 2010, defendant BAILEY prepared

25 and caused to be prepared and signed a false and fraudulent U. ,'3.

26 Individual Income Tax Return, Form 1040, for the calendar year 2009,

27 on behalf of himself as ma:t'ried filing separately, which was filed

28 with the Interned. Revenue Service, and which contained and was

...... ----lL


1 verLEied by a written declaration that it was made under the penalties

2 of perjury and that defendant BAILEY to the best of his knowledge and

3 belief submitted a return that was true, correct, and complete, and

4 wherein it was stated that his taxable income for the calendar year

5 2009 was the sum $0 and that the amount of the tax due and owing

6 therein was the sum of $0, whereas, as he then and there well knew and

7 believed, his taxable income for the oal.endar year 2009 wae in excess

8 of that heretofore stated amo\mt and that upon Sil.id additional taxable

9 income an additional tax was due and owing to the United States.


11 Count 7

12 TAX BVASIQN

13 [26 u.s.c. § 7201]

14 22. The allegations set forth in paragraphs l. through 5, and 9



1.7 and including at least on or about October 19, 2011, within the

18 southe;r:-n Pist::r:-ict: o:C Calit:ornia, defendant W:U"LIAM RICBARI.l BAILEY.

19 (hereinafter "defendant BAXLEY"), who during calendar year 2010 was

20 married, well-knowing and believing that he and his spouse had taxable

21 income and a tax due and owing for the calendar yea:c 2010, did


23 and his spouse to the United States by committing the following

24 affirmative acts of evasion, among others, the likely effect of each

25 of which would be to mislead and conceal their true and correct income


27 //

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case 3:13-cr .. 03046-CAB Document 1 Filed 08/15/13 Page 13 of 15


2 received checks from at least one physician who operated a clinic in





7 deposited income from his practice as a phy:;~ician into a bank account

8 in the name of the "0BO" create\l for the purpose of tax evasion.

9 c. During. the calendar year 2010, . defendant BAILEY


11 in the name of the "OBO" to pay for defendant BAILEY's personal


13 d. on or about October 19, 2011, defendant BAILEY prepared

14 and caused. to be p:t:epa:t:ed and signed a false and fraudulent joint u.s.

15 Individual· Income Ta:x: Return, J;'orm 1040, for the calendar year 2010,

16 on behalf of himself and his spouse, which was filed with the Internal

17 Revenue Service, and which contained and was verified by a written

10 declaration that it was made unde+ the penalties of perjury and that

19 defendant BAILEY to the best of his knowledge and belief sUbmitted a

20 return that was true, corr.ect, and complete, and whe;cein it was stated

21 that the joint taxable income for the calendar year 2010 was the sum

22 $O.and that the amount of the tax due and owing therein was the sum

23 of $0, whereas, as he then and there well. kn<;lw and believed, his joint

24 taxable income for the calendar year 2010 was in ·excess o:e ·that

25 heretofore stated amount and that upon sa.id additional joint taxable

26 inctnne an additional ta:x: was due and owing to the Un:lted States.

27 All in violation o:e Title 26, United States Code, Section 7201.

2s I I

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1

2

case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 14 of 15

Count 9

TAX E'\lASJ:ON

[26 u.s.c. § 720ll

4 24. The allegations set for.th in paragraphs 1 through 5, and 9



7 and including at least on or about October 17, 20l.2, within the

8 Southern District of California, defendant WILLIAM RICHARD BAILEY

9 (hereinafter "defendant BAILEY"), who du:t:ing calendar year 2011 was·

10 married, well-knowing and believing that he and his 13POuse had taxable

11 income and a tax due and owing for the calendar yea.r 2011, did


13 and his spouse to the United .\ltates by committing the following

14 affirmative acts of evasion, among others, the likely effect of each

15 of which would be to mislead and conceal their true and correct income



:1.6 received checks :Erom at least one physician who operated a cliniG in

19 San Diego. County where defendant BAILEY provided physician services

20 in exchange for compensatton. Defendant BAILEY di:r·ected that the


22 b. During the calendar year 2011, defendant BA!l.EY

23 deposited income from his practice as a. physician into a bank account




27 in the name of the "UBO" to pay for defendant BAli,EY' s personal


i , case 3:13-cr-03046-CAB DocumeLlt 1 Filed 08/15/13 Page 15 of 15

1 d. On or about October 17, 2 012, defendant BAILEY prepared

2 and caused to be prepared and signed a false and fraudulent j oirit lJ. s. 3 Indi vidua.l Income Tax Return, Form :L04 o, for the calendar year 2011,

4 on behalf of himself and his spouse, which was filed with the Internal

5 Revenue Service, and which contained and was verified by a written

6 declaration that it was made under the penalties of perjury and that

7 defendant BAILEY to the best of his knowledge and belief submitted a

B return· that was true, correct, and complete, and wherein it was stated

9 that the joint t~able income for the calendar yea.r 2011 was the sum

10 $0 and that the amount of the ta:x: due and owing therein was the sum

11 of $0, whereas, as he then and there well knew and believed, his joint

12 ta:x:al::>le income for the calendar year 2011 was in excess of. that

13 heretofore stated amount and that upon said additional joint taxable

14 income an additional tax was due and owing to the United States.


16 DATED: August 15, 2013.

17

19

20

21 LAURA E. DUFFY United States Attorney

22 (

23 By:

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A TRUE BILL:

~~ Foreperson · """"""

1------11---- -------------- ----- ------------------------ -- ____ J._s_ ------------ ------ ------------ ----- -- ---- -------- --- .

"' c e 3:13-cr-03046-CAB Document 145 Filed 01/28/16 P Q .. F?iLEo~-~

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I JAN '1..lb 2016 I CLEFK ~-: :: ~-;; (> :.J .... -RT

S.Ol.Tf<:;:; :: ~-:·-:- :·; : .... _·::::::~'1: ... BY )EPJTY

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

6 UNITED STATES OF AMERICA,

7 Plaintiff,

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vs. VERDICT

CASE NO. 13CR3046-CAB WILLIAM RICHARD BAILEY,

Defendant.

We the jury in the above entitled cause f1nd the defendant WILLIAM RICHARD BAILEY,

(Not Gliilty@

(Not Guilt~

of Tax Evasion for tax year 2004 as charged in Count One ( l) of the Indictment.

ofT ax Evasion for tax year 2005 as charged in Count Two (2) of the Indictment.

of Tax Evasion for tax year 2006 as charged in Count Three (3) of the Indictment.

of Tax Evasion for tax year 2007 as charged in Count Four ( 4) of the Indictment.

of Tax Evasion for tax year 2008 as charged in Count Five (5) of the Indictment

- I -

. - C e 3:13-cr-03046-CAB Document 145 Filed 01/28/16 PageiD.1365 Page 2 of 2

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Date;

II

II

II

(Not Guilty@

(Not Guilt@

San Diego, California

ofT ax Evasion for tax year 2009 as charged in Count Six (6) of the Indictment.

of Tax Evasion for tax year 20 I 0 as charged in Count Seven (7) ofthe Indictment.

ofT ax Evasion fot tax year 20 II as charged in Count Eight (8) of the Indictment.

Foreperson of the Jury

- 2-

' . Case 3:13-cr-03046-CAB Document 177 Filed 06/06/16

AO 245:8 (CASDRev. 08113) Judgment In a Criminal Case

UNITED STATES DISTRICT COUR'" JUN 0 6 2016

, · CLERK US DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA SOUTC.IEAN DJ8TRJCT OF CALJFORNIA BY - tfO< !ABEPUTY

UNITED STATES OF AMERICA JUD.GMENT lN A CRIMINAL CASE V. (For Offenses Committed 01\ O\' A !tor November I, I 987)

WILLIAM RICHARD :BAILEY (1) Case Number: 13CR3046-CAB

SCOTT GROSS

REGISTRATION NO. 45130298 De&ndiUlt's Attorney

0-THE DEFENDANT: 181 pleaded guilty to coUJI!(s)

181 was round guilty on oount(s) ONE {1) THROUGH EIGHT (8) OF THE EIGHT-COUNT INDICTMENT after a plea of not tl;Uiltv.

Accordingly, the defertdtmt Is aqjudged gullty of such count(s), which involve the :tbllowing offimse(s):

Title & Section 26USC 7201

Natnl'e of Offen~e TAX EVASION

'I'lw d~f<.mdant is sentenced as prov'tded m pages 2 through 6 The sentence is imposed pw·suantto the Sentencing Reform Act of 1984.

0 The defoodant has bee\1 found not go1Ity on count(s)

<.>f this judgmeltt.

Count Numb01'1sl

1-8

0 Count(s) _____________ is dismissed on the motion oftbe United States.

IZl Assessment: $100.00 PER COUNT, FORA TOTAL OF$800.00

181 See fine page 0 Forfeiture pursuant to order :filed , included herein, IT IS ORDERED 1hat the defendant shall notify the United Stares Attorney for this district within 30 days of any

change of name, residenoo, or mailing addt·ess tmtil all fines, restitution, costl!, and special assessments imposed by this . judgment are :lhlly paid. If ord~red to pay l'est!tution, the defendant shall notify the court ani! United States Attorney of any material change in the defendant's economic ciroutns1anoes.

· 1 tleweU'Iy a\t~f.l~ 11no:1. c~ltlf~ on "1/1 - f 'Lo \. ~ _ Tha~ lh1l ~oregolnr, clolmm~i.{i;;t;t~~!l <amd comlct copy of th0 odginmlon..fl!e ln IV1Y office amllln my 1111~al CU!$tOdJy. ..

of Sentence

HON. CATHY II. BENCIVENGO Cl.if:'.Rf(, IJ.S. DISTRICT COURT

SOUTH::lRN lt.lmTAOCT 01>' CAUFOFl~~~A

UNITED STATES DISTRICT JUDGE

A,c.C.O,RSELLQ_ ___ ---·- -----·-__________ .. ---·-·· ........ ___ _ ~y..........,.,..~,--... ""~'"'""'"'.;.,· -,...------ Deputy .. l3CR3046·CAB

I i ' . Case 3: 13-cr-03046-CAB Document 177 Filed 06/06/16 Page 2 of 6

AO 245B (CASD Rev. 08/13) Judgment it1a Criminal Case

I ~D~E~•F~END~~AN~T~:====~vnL~~L~~~M~ru~c~HA~RD~B~A=~=n~Y~(l~)=====-~==---========h-,d~gm-e-n-t-=P~a~==2=o7f6~ I CASE NUMBER: 13CR3046-CAB I

IMPRISONMENT The defendant is hereby committed to the custody of 1l1e United States Bm-eau ofPrisons to be imprisoned for a term of: 41 MONTHS, PER COUNT, TO RUN CONCURRENT.

D Sentence imposed pursuant to Title 8 USC Section 13 26(b ). ~ The court mal,es the following recommendations to the Bureau of Prisons:

PLACEMENT AT EITHER FCC BUTNER OR FPC GREENVILLE TO ALLOW PROPER MEDICAL CARE FOR THE DEFENDANT'S MEDICAL CONDITION(S).

0 The defendant is remanded to the custody of the United States Marshal.

0 The defendant shall summder to the United States Marshal fur this district: 0 at ________ A.M.

on ----------------~--------------D as notified by the United Staies Marsllal.

\

0 . The defendant shall surrender for service of sentence at the institution designated by th\l Bureau of Prisons:

0 on or before

0 as notifi\ld by the United States Marshal.

D as notified by the Pro~ation or Pretrial ServiC\lS Office.

RETURN

I have executed this judgment w follows:

Defendant delivered on to -----------~--

at ---~

------ , with a certified copy of this judgment.

UNITED STAlES MARSHAL

By DEPUTY UNITED STATES MARSHAL

i d Case 3:13-cr-03046-CAB Document 177 Filed 06/06/16 Page 3 of 6 I ' ~

.. AO 245B (CASD Rev. 08/13) Judgment in a Crhninal Ca~e

DEFENDANT: CASE NUMBER:

WJLLIAM RICHARD BAILEY (1) 13CR3046·CAB

SUPERVISED RELEASE

Judgment- Page 3 of 6

Upon release from imprisonment, the d<~fendaJJt shall bt~ on supervised release fol' a term of: THREE (3) YEARS, PER COUNT, TO RUN CONCURRENT.

The defendant shall repo1t to the probation office in the distl'iot to which the defendant Is released wlthln 72 hours ofl'elease fi·om the custody of the Bm·eau ofPrlsous unless l'emoved ft'Om the United States.

The defendant shall not commit another federal, state or local CJ"ime.

For off~n.!es committed on or after September J 3, 1994:

The defendant shall not illegally possess a contl'Ollod substance. The defundimt shall refmln from any lllllawfhl use of a controlled substance, The dofendant shall submit to one dt'Ug test within 15 days ofreleaso frOm imprisonment and at least two periodic ru·ug tests thereafter as determlned by the court. Testing Nquirements will not e~ceed snbmisskm of more than 4 drug tests pel' month durlng the · term of supei'Vision, unless otherwise ordered by coort:. ·

0 The above drug testing condition is suspended, based on the court's determination that the defendant poses a low risk of future substance abuse. (Check, If applicable.) The defendant shall not possess a frrearm, ammunition, destmctive device, or any oth~r dangero11S weapon, 11te defendant shall cooperate in the colleotlon of a DNA slllllplo Jl•om the defendant, pursuant to section 3 ofthe DNA Analysis Backlog EUminatlou Act of2000, pursuant to 18 USC section 3583(a)(7) and 3583(d). The defendant shall comply with the requirements of the Sex Offender Registration and Notification Act (42 U.S.C. § i6901, et

IJ seq.) as directed by the probation officer, the Bureau ofPl'isons, or any state sex offender registration agency ill which he or she resides, works, is a stude!lt, or was convicte4 of a quallf}'lng offense. (Chook if opp/toob/o,)

[J Tbe defendant shall participate iJ.I an approved program for domestic violence. (Ch~ck If applicable.)

If this judgment imposes a flne or a restitution obligation, lt shall be a condition of supervised t•elease that the defendant pay any such flue or restitution that remains llllpald at the commencement of the term of supervised l'elease Jn accordance with the Sohedule of Paymenm set forth jn this judgment.

. The defendant shall comply with lhe standard conditions that hve been adopted by this court. Tlte defendant shall also comply with lffiY special conditions imp~ed.

STANDARD CONDITIONS OF SUPERVISION

l) the defendant shall not leave the judicial district without the petmission ofthe court or probation officer; 2) the defendant shall report to tile probation officer in a mrumer and frequency directed by Ute court or probation officer; 3) the dofendau( shall aru;wer truthfully all inquiries by the probation officer and fullow the instructions of the probation officer; 4) the defendant shall support his or hor dependents and meet other family responslbilitlos; 5) the defendant shall wm·k regularly at a lawful oooupatlon, unless el<l>nsed by the;>robatlon officer fo1' schooling, training, or other aooeptable

1·easons~

6) the defendant shall notifY tho probation officer at least ten days prior to any change inrosidence or employrnon~ 7) the dofendnnt shall reli'ain from excessive use of alcohol and shall not purohaso, possc.1s, use, distribute, or administer any controlled substance or

mw purnphornaliarclatod to uny controlled substanc"''• except as pr"oribod by a physician; 8) the defendant sh•ll not fi·cquent places wltere controlled substances ate illegally sol<~ used, distributed, or admlnlsterod; 9) the defendant •hall not llSsociate with any por.•ons engaged in criminal nativity an it shall not nssoclare with any person convicted of a (~tony,

unless grfllltcd pe•·mlsslon to do so by the probation officer; ' 1 0) the defendant shall pe1mlt a pi'Obntion officer to visit him or he•· at any time at home or elsewhere and shall permit oonftscatlon of any conlrnband

observed in plain view of the probation officer: 11) the defundant shall notify the probation officer within seventy .. two hours <;~fbcing arrested or questioned by a law enforcement officer; 12) tho dofondant shall not enter into any agreement to act as an !nformor or a special agent of a law enforcement agency without tho permission of

the court; and 13) as directed by the probation officer, the defendant shall notify third parties of risks that. may be occwdonetl by the defendant's criminal record or

personal history o:r chara~ter!stics and shntl permit the probntlon officer to make such nodft{.lations and to conflrm the def~ndant1S cmnpUance with such notifioat!on •·equirctnent,

13CR3046-CAB


1 AO 245B (CASD "f.ev, 08/13) Judgment in a Cl'iminal Case

DEFENDANT: WJLLIAMRICHARD BAJLEY (I) 13CR3046-CAB

Judgment · Page 4 of 6 CASE NUMBER:

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SPECIAL CONDITIONS OF SUPERVISION

L Submit person, property, residence, office or vehicle to a search, conducted by a United States Frobation Officer at a reasonable time and in a reasonable manner, based upon reasonable suspicion of contraband or evidence of a violation of a condition of release; failure to submit to a search may be grounds for revocation; the defendant shall warn any other residents that the premises may be subject to searches pursuant to this condition,

2. Repo1't vehicles owned or operated, Ol' in which you have an interest, to the probation officer.

3, Be prohibited from opening checking accounts ot· incurring new credit charges ox opening additional lines of credit without approval of the probation officer, ·

4, :Provide complete disclosure of personal and business financial t'tlcords to the probation officer as requested.

5. Notify the Collections Unit, United States Attorney's Office, of any interest in property obtained, directly or indirectly, includirtg any interest obtained under any other name, or entity, including a trust, partnership o~· col'pOl'ation until tl1e fine or restitt1tion is paid in full.

6, Notify the Collections Unit, United States Attorney's Office, before transfel1'ing any interest in property owned, directly or indirectly, including any interest held or owned under any other name, or entity, including a trust, partnership Ol' corporation,

7. The defendant shall not work for cash and the defendant's employe!' shall pt•ovide regular paystubs with i:he appropriate deductions for taxes.

.. 8. The defendant shall provide the probation officer with access to ru:ty requested financial information

including authorization to conduct credit checks and obtain copies of the defendant's federal income tax returns.

9. The defendru:tt shall cootlel'llte and furnish financial infonnation .and statements to the lntemal Revenue Service (IRS) to detennine all taxes due and owing, including interest and penalties, and shall file any past tax retums in a timely manner. The d<lfendant shall pay in full any O\Jtstanding liability once assessed, including interest and penalties, or enter into an installment paymerlt plan with the Collection Division of the IRS.

1 0, The defendant shall cooperate with any administrative :findings of the IRS and file future income tax retmns as reqtd.red by law,

13CR3046-CAB

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Case 3:13-cr-03046-CAB Document 177 Filed 06/06/16 Page 5 of 6 ' ,

AO 245B (CASD Rev. 08/13) Judgment in a Criminal Case


WILLIAM RICHARD BAILEY (1) 13CR3046-CAB

:RES'l'ITUTION

Tl1e defendant shall pay restit'utlon in the amoant of $489,531.00

Restitution payment shall be to the following:

Victim Internal Revenue Service (JRS)

Amount $316,526.00

J11dgment ·Page 5 of 6

unto t11e United States of America.

(plus prejudgment interest of$111,854.00)

California Franchise Tax Board $61,151.00 i

Restitution payment will not begin l111til the defendant is rt:leased on supervised release. The U.S. Attorney's Office will issue an agreed upon payment schedule prior to the start of supervision. Until restitution has been paid, the defendant shall notify the Clerk of the Court and tht1 United States Attorney's Office of any change in the defendant's mailing or residence address, no later than thirty (30) days af!e1· the change occurs.

The Comt has determined that the ddbndant does not have the ability to pay interest. It i8 ordered that:

The interest requirement is waived

---- ··-···--------- ····- ·-·--·-·--------- ----

13CR3046-CAB

Case 3:13,cr-03046-CAB Document 177 Filed 06/06/16 Page 6 of 6

AO 245B (CASD Rev. 08/13) Judgment In a Criminal Case


WILLIAM RJ:CHARD BAILEY (1) 13CR3046..CAB

FINE.

Judgment • Page 6 of 6

The defendant shall pay a fine in the amount of $80,000.00 ($1 0,000.00 per Count) unto the United States ---'---.---------- of America.

IT IS ORDERED that the defendant pay fine in the amount of$ 80.000.00 • through the Cledc,· U.S. District Court. The defendant shall begin payment of the :fine during his term of supervised release at a rate agreed upon by the parties and the U.S. Attorney's Office will issue a payment schedule prior to the start of supervision. These payment schedules do not :fbreclose the United States from m~;ercising all legal actions, remedies, and process available to it to collect the fine judgment.

Until fine has been paid, the defendant shall notify the Cle!'k of the Court and the United States Attorney's Office of any change in the defelldllllt' s mailing or residence address, no later th.an thh'ty (3 0) days after the cbmge occurs.

This sum shall be paid 0 Immedhitely.

The Court has determined that the defendant does not l1ave the ability to pay interest. It is ordered that:

181 The interest requirement is waived

II ----- "-"-"----·· ··--·· ·--- •"--·-----···- ---··--·-"---·---- "---·· -·-· ·-· --·---- ·--·----"·-·-"-"

13CR3046-CAB

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KA~·IALA D. HARRIS AttorneY General of California ALEXANDRA M. ALVAREZ Supervising Deputy Attorney General MICHAEL J. YUN Deputy Attorney General State Bar No. 292587

600 West Broadway, Suite 1800 San Diego, CA 92fOI P.O. Box 85266 San Diego, CA 92186-5266 Telephone: (619) 738-9453 Facsimile: (619) 645-2061

Aflorneys./(;r Complainant

!lED

BEFORE THE OSTEOPATHIC MEDICAL BOARD OF CALIFORNIA

DEPARTMENT OF CONSUMER AFFAIRS STATE OF CAUFORNIA

In the Matter of the Accusation Against:

WILLIAM R. BAILEY, D.O. 4510 Executive Drive, Suite 1 07 San Diego, CA 92121

Osteopathic Physician's and Surgeon's License No. 20A58l1

Respondent.

Complainant alleges:

Case No. 900-2016-000077

ACCUSATION

PARTIES

1. Angelina M. Burton (complainant) brings this Accusation solely in her official

capacity as the Executive Director of the Osteopathic Medical Board of California, Department of

Consumer Affairs, State of California.

2. On or about November 20, 1989, the Osteopathic Medical Boarc(of California

(Board) issued Osteopathic Physician's and Surgeon's License No. 20A58ll to William R.

Bailey, D.O. (respondent). The Osteopathic Physician and Surgeon License was in full force and

Ill

---···-·· .. --.... -····-··-·-·-.. ··------ ---·--------·----1 ACCUSATION (900-20 16-000077)

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effect at all times relevant to the charges brought herein and will expire on April 30, 2018, unless

renewed ..

3. On or about August 24, 2016, the Osteopathic Medical Board of California

automatically suspended respondent's Osteopathic Physician's and Surgeon's License No.

20A5811 pursuant to Business and Professions Code section 2236.1, subdivision (a).

JURISDICTJON

4. ·n1is Accusation is brought before the Osteopathic Medical Bom·d of Califomia

(Board), under the authority of the following laws. All section references are to the Business and

Professions Code (Code) unless otherwise indicated.

5. Section 118, subdivision (b), of the Code provides, in pertinent part, that the

suspension/expiration[ ... ] of a license shall not deprive the Board[ ... ] to proceed with a

disciplinary action during the period within which the license may be renewed, restored, reissued

or reinstated.

6. Section 2234 of the Code states, in pertinent part:

The board shall take action against any 'licensee who is charged with

unprofessional conduct. ln addition to other provisions of this article, unprofessional

conduct includes, but is not limited to, the following:

"(a) Violating or attempting to violate, directly or indirectly[ ... ] any provision

ofthis chapter.

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"(e) The commission of any act involving dishonesty or corruption which is

substantially related to the quali11cations, functions, or duties of a physician and

smgeon.

7. Section 2236 of the Code states, in pertinent part:

26 "(a) The conviction of any offense substantially related to the qualifications,

27 functions, or duties of a physician and surgeon constitutes unprofessional conduct

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ACCUSATION (900-20 16-000077)

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within the meaning ofthis chapter. The record of conviction shall be conclusive

evidence only of the fact that the conviction occurred.

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"(d) A plea or verdict of guilty or a conviction after a plea of nolo contendere is

deemed to be a conviction within the meaning of this section and Section 2236.1.

The record o:f conviction shall be conclusive evidence of the fact that the conviction

occurred."

8. · California Code of Regulations, title 16, section I 654 states, in pertinent part:

''For purposes of denial, suspension, or revocation of a certi11cate pursuant to

Code Division 1.5 (commencing with Code Section 475), a crime or act shnll be

considered to be substantially related to the qualifications, functions or duties of a

person holding a certificate under the Osteopathic Act, if to a substantial degt·ee. it

evidences present or potential unfitness of u person holding the certificate to perform

the functions of a physician and surgeon in a manner consistent with the public health,

safety, or welfare. Such crimes or acts shall inchJde but not be limited to those

involving the violating or attempting to violate, directly or indirectly [ ... ] any

provision or term of the Osteopathic Act or the Medical Practice Act or the conviction

of a crime involving fiscal dishonesty."

COST RECOVKRY

9. Section 125.3 of the Code states, in pertinent part:

"(a) Except as otherwise provided by law, in any order issued in resolution of a

disciplinary proceeding before any board within the department or befor~ the

Osteopathic Medical Board, upon request of the entity bringing the proceeding, the

administrative law judge may direct a licentiate found to have committed a violation

or violations of the licensing act to pay a sum not to exceed the reasonable costs of the

investigation and enforcement of the case.

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ACCUSATION (900-20 16-000077)

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''(c) A certified copy of the actual costs, or a good faith estimate of costs where

actual costs are not available, signed by the entity bringing the proceeding or its

designated representative shall be prima facie evidence of reasonable costs of

investigation and prosecution of the case. The costs shall include the amount of

investigative and enforcement costs up to the date of the hearing, including, but not

limited to, chru·ges imposed by the Attomey General.

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"(e) If an ordei· for recovery of costs is made and timely payment is not made as

directed in the board's decision, the boru·d may enforce the order for repayment in any

appropriate court. This right of enforcement shall be in addition to any other rights

the board may have as to any licentiate to pay costs.

"(f) In any action for recovery of costs, proof of the board's decision shall be

conclusive proof of the validity of the order of payment and the terms for payment.

"(g)(l) Except as provided in paragraph (2), the board shall not renew or

reinstate the license of any licentiate who has failed to pay all of the c<ists ordered

under this section.

U H.

FIRST CAUSE FOR DISCIJ>LJNE

(Conviction of Cl'imcs Substantinlly Related to Qualificntions, Functions, and Duties of an Osteopathic Physician and Sm·gcon)

21 ]0. Respondent has subjected his Osteopathic Physician's and Surgeon's License No.

22 20A5811 to disciplinary action under sections 2234 and 2236, as defined by section 2236,

23 subdivision (a), of the Code, and under title 16 section I 654 of the California Code of

24 Regulations, in that he has been convicted of crimes substantially related to the qualifications,

25 functions, or duties of a physician and surgeon and of a person holding a certificate under the

26 Osteopathic Act, as more particularly alleged hereinafter:

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ACCUSATION (900-20 16-000077)

.2016 Conviction of Eight (8) Counts of Felony Tax Evasion

2 11. On or about January 28,2016, in a federal criminal proceeding entitled Uni!ed Stares

3 of America v. William Richard Bailey in Case No. 13CR3046CAB in the United States District

4 Court, Southem District of California, respondent was found guilty and convicted of eight ( 8)

5 counts of Tax Evasion (Class D Felony), in violation of Title 26, United States Code, sections

6 7201, a felony within the meanil'lg of California Business and Professim1s Code section 2236.1.

7 12. On or about .June 3, 2016, respondent was sentenced to forty-one ( 41) months of

8 imprisonment, per count, to run concurrently, in federal prison, and fllrther ordered to three (3)

9 years supervised release upon his release il'Om prison, to pay restitution in the amount of

10 $489,531.00 to the victims Internal Revenue Service (IRS) and California Franchise Tax Board,

II and to pay a fine in the amount of $80,000.00.

12 13. On or about June 3, 2016, respondent was remanded and his scheduled release elate is

13 May21,2019.

14 SECOND CAUSE FOR DISCIPLINE

15 (Commission of Any Act Involving Dishonesty or Corruption)

16 14 .. Respondent has subjected his Osteopathic Physician's and Surgeon's License No.

17 20A5811 to disciplinary action under sections 2234, as defined by section2234, subdivision (e),

18 of the Code, and under title 16 section 1654 ofthe California Code of Regulations, in that he has

19 committed acts involving dishonesty or corruption, as more particularly alleged in paragraphs I 0

20 through 13, above, which are hereby incorporated by reference ~md realleged as if fully set forth

21 herein.

22 THIRD CAUSE FOR DISCJl>LINE

23 (Unprofessional Conduct)

24 15. Respondent has subjected his Osteopathic Physician's and Surgeon's License No.

25 20A5811 to disciplinary action under section 2234 of the Code, in that he hus engaged in conduct

26 which breaches the rules or ethical code of the medical profession, or conduct which is

27 unbecoming a member in good standing ofthe medical profession, and which demonstrates an

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ACCUSATION (900-20 I 6-000077)

unfitness to practice medicine, as more particularly alleged in paragraphs 10 througl1 14. above.

2 which are hereby incorporated by reference and rcalleged as if fully set forth herein.

3 PMYrn

4 WHEREFORE, complainant requests that a hearing be held on the mailers herein alleged,

5 tmd that following the heating, the Osteopathic Medical Board of California (Board) issue a

6 decision:

7 I. Rewking or suspending Osteopathic Physician's and Surgeon's License No.

8 20A581 1, issued to respondent William R. Bailey, D.O.;

9 2. Ordering respondent William R. Bailey, D.O. to pay the Board the reasonable costs of

10 the investigation and enforcement of this case, pursuant to Business and Professions Code section

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3. Taking such other and tl.niher action as deemed necessary and proper.

DATED: ~bU- ;;_~ ;2{)//, ;.;!_~ . }h~f..--__ AN~I\IU3~TON

SD20 16701908 81455159.doc

Executive Director Osteopathic Medical Board oi'Calitornia State of Cali lorn ia Complainanl

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ACCUSATION (900-20 16-000077)

DECLARATION OF SERVICE BY CERTIFIED MAIL AND FIRST CLASS MAIL (Separate Mailings)

In the Matter of the Accusation Against: William R. Bailey, D.O.

Case No: 900-2016-000077

I, the undersigned, declare that I am over 18 years of age and not a party to the within cause; my business address is 1300 National Drive, Suite 150, Sacramento, CA 95834.

On September 21, 2016, I served the attached Accusation, Statement to Respondent, Request for Discovery, Notice of Defense (2 copies) and Government Codes Sections 11507.5, 11507.6 and 11507.7 by placing a true copy thereof enclosed in a sealed envelope as certified mail with postage thereon fully prepaid and return receipt requested, and another true copy of the Accusation, Statement to Respondent, Request for Discovery, Notice of Defense (2 copies) and Government Codes Sections 11507.5, 11507.6 and 11507.7 as enclosed in a second sealed envelope as first class mail with postage thereon fully prepaid, in the internal mail collection system at the Office of the Osteopathic Medical Board of California addressed as follows:

NAME AND ADDRESS

William R. Bailey, D.O. 451-30-298 Lompoc US Penitentiary. 3901 Klein Blvd. Lompoc, CA 93436

(certified and regular mail)

Certified Mail No. 91 7199 9991 7036 9509 9587

91 7199 9991 7036 9509 9587

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on September 21, 2016 at Sacramento, California.

Steve Ly ~d Signature ~ Declarant

cc: Michael J. Yun, Deputy Attorney General

FilED

MAY ::~ r· 2017

BEFORE THE OSTEOPATHIC 11/!I:OICA!. BOARD OSTEOPATHIC MEDICAL BOARD OF CALIFORNIA OF CAliFORNIA

DEPARTMENT OF CONSUMER AFFAIRS STATE OF CALIFORNIA

[n the Matter of the Accusation Against:

Case No. 900-2016-000077

WILLIAM RICHARD BAILEY, OAH No: 2016110734

Respondent ORDEU OF DECISION

DECISION

The attached Proposed Decision of the Administrative Law Jttdge is hereby

adopted by the Osteopathic Medical Board of CaJiforrua, Department of Consumer Affairs,

as its Decision in the above-entitled matter.

This Decision shall become effective on /liav 1 1, '& 0 I 1 \)

It is so ORDERED )11ec1 )D, J4) / 'J

By~.u ~_g; ao .TO "HA. ZAM TO,D.O.,PRESIDENT POR THE OSTEOPATHIC MEDICAL BOARD OF CALIFORt'IIA DEP ARTiviENT OF CONSUMER AFFAIRS

BEFORE THE· OSTEOPATHIC MEDICAL BOARD OF CALIFORNIA

DEPARTMENT OF CONSUMER AFFAIRS STATE OF CALIFORNIA

In the Matter ofthe Accusation Against:

WILLIAMR. BAILEY, D.O.

Osteopathic Physician's and Surgeon's . License No. 20A5811

Respondent.

Case No. 900-2016-000077

OAHNo. 2016110734

PROPOSED DECISION

Debra D. Nye-Perkins, Administrative Law Judge, Office of Administrative Hearings, · State of Califomia, heard this matter on March 13, 2017, in San Diego, California.

Michael J. Yun, Deputy Attomey Geneml, represented complainant Angelina M. Burton, Executive Director, Osteopathic Medical Board of California, Department of Consumer Affairs, State of California.

No appearance was made on behalf of respondent, William R. Bailey. On March 9, 2017, respondent's motion for preliminary injunction was denied. Complainant requested that respondent's default be entered and that complainant be permitted to prove up the allegations set forth in the Accusation. Complainant established compliance with Government Code sections 11505 and 11509, and the hearing proceeded as a default pursuant to Government Code section 11520.

The matter was submitted on March 13, 2017.

FACTUAL FINDINGS

Jurisdictional Matters

1. On November 20, 1989, the Osteopathic Medical Board of California issued Osteopathic Physician's and Surgeon's License No. 20A5811 to respondent William R. Bailey. His license expires on April 30, 2018. On August 24, 2016, pursuant to Business

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and Professions Code section 2236.1, subdivision (a), the board automatically suspended respondent's license as a result of his incarceration.

2. On September 21, 2016, complainant, signed the accusation in her official capacity. The accusation and other required documents were served on respondent. Respondent timely filed a notice of defense.

Respondent's Conviction

3. On January 28, 2016, respondent was convicted in the United States District Court for the Southern District of California, in Case No. 13CR3046CAB, of eight counts of Tax Evasion (Class D Felony), in violation of Title 26, United States Code, section 7201.

As a result of respondent's conviction, respondent was sentenced to 41 months of imprisonment, per count, to run concurrently, in federal prison, and furlher ordered to three years supervised release upon his release from prison, to pay restitution in the amount of $489,531 to the victims, the Internal Revenue Service and the California Franchise Tax Board, and to pay a fine in the amotmt of$80,000.

Circumstances of the Conviction

4. The circumstances of respondent's conviction were obtained from the certified copy of the indictment. For the years 2004 through 2011 respondent provided physician services in exchange for compensation under service contracts as an employee of a "trust" or "unincorporated business trust organization" (UBO) created by respondent for the purpose of concealing from the Internal Revenue Service (IRS) income from respondent's practice as a physician. During that time period, respondent received checks from at least two physicians operating clinics in the San Diego area where respondent provided physician services in exchange for compensation. Respondent directed that those checks be deposited to lhe UBO.

·Respondent opened a bank account in the name of the UBO whereby he had signature authority on the bank account.

Respondent failed to file a U.S. individual tax return for the tax years 2004, 2005, 2006. In 2007 respondent appeared before the U.S. Tax Court in the Southern District of California and that court found that respondent had taxable income during the years 2004 through 2006 that must be reported to the IRS. On or about September 10, 2008, respondent signed and filed a false and fraudulent U.S. Individual Income Tax Return for each of the calendar years 2004, 2005, 2006, and 2007 wherein he stated that his taxable income for each ofthose years was $0 and the amount oftax clue was $0.

On April15, 2009, respondent signed and filed a false and fraudulent U.S. Individual Income Tax Return for the calendar year 2008 wherein he stated that his taxable income was $0 and the amount oftax clue was $0.

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On Apri115, 2010, respondent signed and filed a false and fraudulent U.S. Individual Income Tax Retum on behalf of himself as married filing separately for the calendar year 2009 wherein he stated that his taxable income was $0 and the amount of tax due was $0.

On October 19,2011, respondent signed and filed a false and fraudulent joint U.S. Individual Income Tax Return on behalf of himself and his wife for the calendar year 2010 wherein he stated that his taxable income was $0 and the amount of tax due was $0.

On October 17, 2012, respondent signed and filed a false and fraudulent joint U.S. · IndividtJal Income Tax Retum on behalf of himself and his wife for the calendar year 2011 wherein he stated that his taxable incoine was $0 and the amount oftax due was $0.

Costs

5. The Attorney General's Office filed a Certification of Prosecution Costs . pursuant to Business and Professions Code section 125.3 seeking cost recovery in the amount of$10,832 in legal fees. The Attomey General's Office also filed a Certification of Costs of Investigation pursuant to Business and Professions Code section 125.3 seeking cost recove1y in the amount of $3 72 in investigation fees.

6. In determining whether respondent should be compelled to pay the board's costs, one must consider whether the costs are reasonable. Both declarations submitted by the Deputy Attorney General in support of the costs of prosecution and cost of investigation described the tasks performed, identified who petfmmed them, and specified the time spent on the tasks. Based upon the nature of tlris case and the amount of time spent on the case, the cost of prosecution and investigation of$11,204 is reasonable.

LEGAL CONCLUSIONS

The Burden and Standard of Proof

1. An individual who holds a license to practice a particular profession has a foodamental vested right to continue in that licensed activity. Procedural due process requires a regulatory board or agency seeldng to suspend or revoke a professional license to prove the allegations of an accusation by. clear and convincing evidence rather than proofby a preponderance of the evidence. (Owen v. Sands (2009) 176 Cai.App.4th 985, 991-992.) Complainant had the burden of proof in this matter to establish the allegations in the accusation by clear and convincing evidence.

2. Clear and convincing evidence requires a finding of high probability; the evidence must be so clear as to leave no substantial doubt; it must be suf±lcieutly strong to command the unhesitating assent of every reasonable mind. This requirement presents a heavy burden, far in excess of the preponderance of evidence standard that is sufficient for most civil litigation. (Christian Research Institute v. A/nor (2007) 148 Cal.App.4th 71, 84.)

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Imposing License Discipline

3. The suspension or revocation of a license to engage in a profession is not penal; its purpose is to protect the public from incompetence and lack of integrity in those practicing the profession. The business of practicing medicine is intimately connected with, and has a vital relationship to, the health, safety, and welfare of the public. Public safety must be regarded as superior to private rights. (Brodsky v. California State Ed. of Pharmacy (1959) 173 Cal.App.2d680, 688-689.)

4. Business and Professions Code section 2450.1 provides:

Protection of the public shall be the highest priority for the Osteopathic Medical Board of California in exercising its licensing, regulatory, and disciplinary functions. Whenever the protection ofthe public is inconsistent with other interests sought to be promoted, the protection of the public shall be paramount.

Applicable Statutes

5. Business and Professions Code section 2451 provides:

The words "Medical Board of"California," the tenn "board," or any reference to a division of the Medical Board of California as used in this chapter shall be deemed to mean the Osteopathic Medical Board of California, where that board exercises the functions granted to it by the Osteopathic Act.

6. Business and Professions Code section 490 provides in pmt:

(a) In addition to any other action that a board is permitted to take against a licensee, a board may suspend or revoke a license on the ground that the licensee has been convicted of a crime, if the crime is substantially related to the qualifications, functions, or duties of the business or profession for which the Ii cense was issued.

(b) Notwithstanding any other provision of law, a board may exercise any authority to discipline a licensee for conviction of a crime that is independent of the authority granted under subdivision (a) only if the crime is substantially related to the qualifications, functions, or duties of the business or profession for which the licensee's license was issued.

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(c) A conviction within the meaning ofthis section means a plea . · .. of guilty. . . . Any action that a board is permitted to take following the establishment of a conviction may be taken when the time for appeal has elapsed ....

7. Business and Professions Code section 2234 provides in part:

The board shall take action against any licensee who is charged with unprofessional conduct. In addition to otl1er provisions of fuis article, unprofessional conduct includes, but is not limited to, the following:

(a) Violating or attempting to violate, directly or indirectly, assisting in or abetting the violation of, or conspiring to violate any provision of this chapter.

[~] ... [~ (e) The commission of any act involving dishonesty or corruption that is substantially related to the qualifications, functions, or duties of a physician and surgeon ....

8. Business and Professions Code section 2236 provides in part:

(a) The conviction of any offense substantially related to fue qualit1cations, functions, or duties of a physician and smgeon constitutes unprofessional conduct within the meaning ofthis chapter. The record of conviction shall be conclusive evidence only of the fact that the conviction occurred.

[~] ... [~

(d) A plea or verdict of guilty or a conviction after a plea of nolo contendere is deemed to be a conviction within the meaning of this section and Section 2236.1. The record of conviction shall be conclusive evidence of fue fact that the conviction occuned.

Substantial Relationship

9. To justify the imposition of discipline, there must be some nexus between an act or omission and the professional's fitness or competence to practice. The Legislature has established such a nexus with respect to certain acts or omissions even where the acts or omissions do not actually impair a professional's ability to practice. It does so by expressly identifying the act or omission as an instance of "unprofessional conduct." (Medical Bd. of California v. Sup. Ct. (Liskey) (2003) 111 Cal.App.4th 163, 174.)

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A determination that a licensee's conviction justifies discipline cannot rest on the moral reprehensibility of the underlying conduct, but requires a reasoned detennination that the conduct was in fact substantially related to the licensee's fitness to engage iri the profession. Licensing authorities do not enjoy unfettered discretion to determine on a caseby-case basis whether a given convictiou is substantially related to the relevant professional qualifications. Business and Professions.Code section 48lrequires each licensing agency to "develop criteria to aid it ... to determine whether a crime or act is substantially related to the qualifications, functions, or duties of the business or profession it regulates." (Donaldson v. Dept. of Real Estate of State of Cal. (2005) 134 Cal.App.4th 948, 955-956.)

10. Califomia Code of Regulations, title 16, section 1654, provides:

For purposes of denial, suspension, or revocation of a certificate pursuant to Code Division 1. 5 (commencing with Code Section 475), a crime or act shall be considered to be substantially related to the qualifications, functions or duties of a person holding a certificate under the Osteopathic Act, if to a substantial degree, it evidences present or potential unfitness of a person holding the certificate to petfmm the functions of a physician and surgeon in a manner consistent with tl1e public health, safety, ot welfare. Such crimes or acts shall include but not be limited to those involving the violating or attempting to violate, directly or inditectly, or assisting or abetting the violation of, or conspiring to violate any provision or term of the Osteopathic Act or the Medical Practice Act or the conviction of a crime involving fiscal dishonesty.

11. The express language of California Code ofRegulations, title 16, sectionl654, and the clear intent of the regulation, demonstrate that respondent's eight counts of tax evasion were crimes involving fiscal dishonesty, constituted unprofessional conduct and his conviction was substantially related to the qualifications, functions and duties of a physician.

Cause Exists to Impose Discipline Against Respondent's License

12. First Cause for Discipline: Cause exists under Business and Professions Code sections 490, 2234, subdivision (a), and 2236, subdivision (a), to impose discipline on respondent's license. Clear and convincing evidence established that respondent was convicted of eight counts of tax evasion on January 28,2016, and that this conviction was substantially related to ilie qualifications, functions and duties of a physician.

13. Second Cause for Discipline: Cause exists under Business and Professions Code section 2334, subdivision (e), to impose discipline on respondent's license. Clear and convincing evidence established that respondent was convicted of eight counts of tax evasion on J anuruy 28, 2016, and that the acts of dishonesty or corruption underlying this conviction were substantially related to the qualifications, functions and duties of a physician.

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14. Third Cause for Discipline: Cause exists under Business and Professions Code section 2234, subdivision (a), to impose discipline on respondent's license. Clear and convincing evidence established that respondent was convicted of eight counts of tax evasion on Janumy 28, 2016, and that the acts underlying this conviction constitute conduct unbecoming a member in good standing of the medical profession and demonstrate an unfitness to practice medicine.

Rehabilitation

15. California Code of Regulations, title 16, section 1769, sets forth the criteria for rehabilitation. It provides in part:

(c) When considering the suspension or revocation of a facility or a personal license on the ground that the licensee or the registrant has been convicted of a crime, the board, in evaluating the rehabilitation of such person and his present eligibility for a license will consider the following criteria:

(1) Nature and severity of the act(s) or offense(s).

(2) Total criminal record.

(3) The time that has elapsed since commission of the act( s) or offense( s).

( 4) Whether the licensee has complied with all terms of parole, probation, restitution or any other sanctions hiwfully imposed against the licensee.

(5) Evidence, if any, of rehabilitation submitted by the licensee.

16. Rehabilitation is a state of mind and the law looks with favor upon rewarding with the opportunity to serve, one who has achieved reformation and regeneration. (Pacheco v. State Bar (1987) 43 Cal.3d1041, 1058.) The evidentiary significance of misconduct is greatly diminished by the passage oftime and by the absence of similar, more recent misconduct. (Kwasnikv. State Bar (1990) 50 Cal.3d 1061, 1070.)

17. Respondent made no appem·ance at the hearing and presented no evidence of rehabilitation.

Evaluation

18. Respondent was convicted of eight counts of tax evasion on Janumy 28, 2016, only one yem· ago. Respondent is currently incarcerated for 41 months in federal prison as a

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result of his conviction. The nature and severity of his conviction is very serious and involves fraudulent and fiscal dishonesty. His offenses were relatively recent in time. No evidence of rehabilitation was presented.

No discipline other than l'evocation is suppmted by this record.

Costs of Prosecution

19. Business and Professions Code section 125.3 provides in part:

(a) Except as otherwise provided by law ... upon request of the entity bringing the proceeding, the administrative law judge may direct a licentiate found to have committed a violation or violations of the licensing act to pay a sum not to exceed the reasonable costs of the investigation and enforcement of the case.

20. Zuckerman v. State Board of Chiropractic Examiners (2002) 29 Cal.4th 32 held that the regulation imposing costs for investigation and enforcement under Title 16, California Code of Regulations, section 317.5 (which is similar to Bus. & Prof. Code§ 125.3) did not violate due process in a case involving the discipline of a chiropractor. But, it was incumbent on the State Board of Chiropractic Examiners to exercise its discretion to reduce or eliminate cost awards in a manner that ensured that section 317.5 did not "deter chiropractors with potentially meritorious claims or defenses from exercising their right to a hearing."

The Supreme Court set forth four factors that the State Board of Chiropractic Examiners was required to consider in deciding whether to reduce or eliminate costs: (1) whether the chiropractor used the hearing process to obtain dismissal of other charges or a reduction in the severity of the discipline imposed; (2) whether the chiropractor had a "subjective" good faith belief in the merits of his position; (3) whetl1er the chiropractor raised a "colorable challenge'' to the proposed discipline; and ( 4) whether the chiropractor had the financial ability to make payments.

The Zukerman criteria were applied in this matter, and it is concluded that issuing an order directing respondent to pay the board's costs of prosecution and investigation in this matter will not have a chilling effect on future respondents' exercise of their right to a hearing. Respondent shall be required to pay $11,204 in prosecution and investigation costs. The costs shall be payable as a condition precedent tore-licensure.

ORDER

1. Osteopathic Physician's and. Surgeon's License Number 20A5811, issued to respondent William R. Bailey, is revoked.

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2. As a condition precedent to reinstatement of his license, respondent shall reimburse the board for its costs of investigation and prosecution in the amount of $11,204. Said amount shall be paid in full prior to the reapplication or reinstatement of his license unless otherwise ordered by the board.

DATED: April 7, 2017

DEBRA D. NYE-PERKINS Administrative Law Judge Office of Administrative Hearings

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DECLARATION OF SERVICE BY MAIL

In the Matter of the Accusation Against:

William Richard Bailey, D.O. Case No: 900 2016 000077

I, the undersigned, declare that I am over 18 years of age and not a party to the within cause; my business address is 1300 National Drive, Suite 150, Sacramento, CA 95834. I served a true copy of the attached:

DECISION PROPOSED DECISION

by mail on each of the following, by placing it in an envelope (or envelopes) addressed (respectively) as follows:

NAME AND ADDRESS

Willian Richard Bailey, D.O. 451·30-298 Lompoc US Penitentiary 3901 Klein Blvd. Lompoc. CA 93436

CERT NO.

91 7199 9991 7036 9572 4946

Each said envelope was then, on May 30, 2017 sealed and deposited in the United States mail at Sacramento, California, the county in which I am employed, with the postage thereon fully prepaid and return receipt requested.

Executed on May 30, 2017 at Sacramento, California.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Steve Ly

Typed Name

cc: The Honorable Debra D. Nye-Perkins, Administrative Law Judge Michael J. Yun, Deputy Attorney General

Documents

Case 3:13cr-03046-CAB Document 1 Filed 08/15/13 … . I ' Case 3:13-cr-03046-CAB Document 1 Filed 08/15/13 Page 2 of 15 1 3. In or about August and September 2004, defendant BAILEY